Futures Point To A Stronger Open
METALS
GOLD:
The spec interest continues to feed gold prices higher and it would seem like
the weakness in stocks and the Dollar is an afterthought. In other words, the
gold market would seem to have legs and might not be totally reliant on a
decline in the Dollar. Apparently Australian banks were buyers overnight and
that means another banking sector player has shown an affinity for gold.
SILVER:
Considering the leadership from gold, the silver market is probably poised to
climb above $4.80 today basis the September contract. However, COMEX silver
stocks still haven’t shown any sign of tightening and the equity market
influence for silver is less than helpful. In the end, the action in gold should
be enough to put September silver back up into the $4.80 to $4.90 trading range.
PLATINUM:
The platinum market will be confronted with a triple top today unless it manages
to climb above $690. Strength in gold should support platinum or at least keep
the platinum/gold-spread action from limiting the upside in platinum. Apparently
the economic recovery is strong enough to tighten up an already tight platinum
supply and demand equation and that in turn evidently justifies a return to
historically high ground. Weekly resistance in platinum comes in at $707 off the
March highs. Â
COPPER:
While precious metals prices were firm, industrial metals are sagging. Chinese
copper prices were higher and that should serve to reduce the liquidation
pressure in place in the
US
. The
pace of LME copper stocks declines is pretty impressive and should be considered
a bullish issue for prices.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -35, HEAT-65 ,UNGA-78, NG -60 Â The energy complex finished
within an inside day Monday and is almost dead center of the last weeks trading
action. Apparently the trade saw some selling come in as rumors swirled that
West African crude supply was on its way to the
US
.
NATURAL
GAS
The
natural gas market failed to hold the highs posted early in the session Monday,
as the weather outlook is really muted and the trade is already looking forward
with some concern to the weekly inventory report this coming Thursday. Critical
support is seen in the September contract at $5.00, with an upside breakout
thought to be underway with a trade back above $5.23.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS +17 One would think
that such significant weakness in the stock market would have given Treasuries a
little support over the last couple of sessions. However, the Treasury market is
simply sliding lower regardless of regularly scheduled macro economic numbers
and a series of lackluster corporate earnings reports. Even with reports that
the BOJ is selling Yen (to lower the exchange rate for exporters) and using the
proceeds of those sales to buy US government debt, the Treasury market doesn’t
seem to be showing much in the way of support.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+120 DOW +8 NIKKEI -41 FTSE +1Â
 The stock market seems to be searching for negative stories, as the
trade decided to embrace disappointing corporate earnings reports, even though
there were plenty of favorable reports to focus on. This morning the market will
see earnings from Amgen, UPS, Sun and Occidental Petroleum. In the overnight
news the market saw favorable earnings from Texas Instruments that would seem to
foster the recovery view toward the technology sector.
FOREIGN
EXCHANGE
Dollar:
Another new low for the move would not seem to be caused by any specific event.
In fact, even with rumors swirling that the BOJ is selling Yen and buying
US
government debt the Dollar isn’t finding much in the way of long interest. The
trade would seem to be a little put off by
US
political policy. With the death toll rising in
Iraq
, the US
rational for the war in
Iraq
under
fire and US involvement in
Liberia
underway, there would seem to be cause for the trade to look negatively toward
the Dollar. In other words, unfavorable policies are apparently serving to
undermine the Dollar partially because the macro economic news is non descript.
In fact, until a durable goods report Friday morning, guidance on the
US
economy
will have to be garnered from various US corporate earnings reports. In the
meantime, little looks to discourage the current slide in the Dollar. Next
downside targeting in the Dollar comes in at 95.65.
EURO:
With the Euro climbing back above a down trend resistance line Monday, we
suspect that more minor short covering will be seen. However, the information
from the Euro zone isn’t of the caliber that would seem to justify a significant
extension of gains. Comments from the ECB (Trichet) this morning suggest that
the Euro zone will see positive growth in the second half of 2003 and that in a
way partially justifies the recent rise in the Euro but it doesn’t really
rationalize an increase in upside momentum. Apparently the ECB official
downplayed the threat of a deflationary problem in
Germany
. In our
mind, as long as the Euro zone has a threat of deflation in consideration,
investors should be wary of throwing money at the currency. Therefore, more
gains are possible but we only see a minimal near term target of 113.72.Â
YEN:
Considering the rumor mill overnight, one would expect the Yen to continue
lower. Supposedly, the BOJ is selling Yen and buying US government securities
and that is undermining the Yen this morning. June crude steel output in
Japan
rose
1.9% and that comes in a core industry that has been a problem area for
Japan
.
Critical support is seen at 84.00 and then again down at 83.77.
SWISS:
A failure at 74.00 would seem to put an end to the upside in the Swiss. We
really were surprised to see the magnitude of the rise in the Swiss off the July
low and now it would appear that the run has concluded. We suspect that the
Swiss will settle into a range bound by 72.58 and 73.75.
POUND:
Negative readings from the CBI should undermine the Pound. The industrial output
balance remained in negative territory, with order books showing significant
deterioration. In fact, the CBI suggests that 68% of firms are operating below
capacity and that highlights why there has been recent talk of additional BOE
interest rate cuts. Therefore, we have to think that the Pound will see very
solid resistance around the 160.00 level.Â
CANADIAN:
Weakness in the Dollar has taken the edge off the Canadian liquidation. However,
we are not sure that the Canadian economy is set to throw off a macro economic
number that would truncate the negative attitude fostered by the massive decline
in the currency over the last ten sessions. For the time being, we expect
support at 70.50 to hold but the outlook for the Canadian is at best suspect.